Stock futures point to pullback after Dow’s best day in 8 months

U.S. stock-index futures pointed to a lower start for major benchmarks on Thursday, one day after Federal Reserve ChairmanPowell’s dovishly interpreted speech sparked a market rally, the likes of which have not been seen since March, and as investors turn their focus to other macro headwinds, like a rising dollar, slumping oil prices and slowing global growth.

How are the benchmarks trading?

Futures for the DowJones Industrial Average YMZ8, -0.02% were down 33 points, or 0.1% to 25,313, while those for the S&P 500 ESZ8, -0.16% were falling 8 points, or 0.3% to 2,733. Nasdaq-100 futures NQZ8, -0.32% fell 37.25 points, or 0.5% to 6,881

The percentage gains on the Dow and S&P Wednesday were the largest since March 26 while the Nasdaq logged its best day since Oct. 25. The move left the S&P 500 with its second-best three-day run since the 2016 presidential election, according to FactSet.

What’s driving the market?

The U.S.-China trade spat will be foremost in investors minds, as investors await developments from the G-20 summit, set to begin Friday in Buenos Aires, and which will include a face-to-face meeting between President Trump and Chinese President XiJinping.

Investors hope the two leaders will be able to reach a deal, or a framework for further negotiations, that would hit the pause button on new or expanded tariffs on Chinese imports that the president has consistently threatened over the course of 2018.

Meanwhile, Trump on Thursday morning tweeted that “billions of dollars” are pouring into the U.S. Treasury from tariffs and that there is “a long way to go.”

The president and his top economic adviser, Larry Kudlow, both made statements this week that cast doubt on the likelihood of a trade deal or framework that would prevent new or expanded tariffs on Chinese imports from taking effect in 2019. Other media reports, however, suggest that this is just posturing on the part of the White House.

What are the strategists saying?

“As is typical with this market, the Fed chair gave an inch and the market took a yard,” wrote Mike O’Rourke, chief market strategist at JonesTrading, in a research note, arguing that while rising interest rates are a headwind for the market, they are not the only headwind.

Investors can expect a bevy of data describing the health of the American consumer, from weekly jobless claim numbers to be released at 8:30 a.m. ET, to data on personal income, consumer spending, and core inflation for the month of October, to be released at the same time.

New data on pending home sales will be released by the National Association of Retailers at 10 a.m.

At 2 p.m., the Federal Reserve will release minutes from its November meeting, while Cleveland Fed president and FOMC voting member LorettaMester will give remarks at the same time.

Express Inc. EXPR, -18.30% stock fell 5.3% before the bell, after the apparel retailer beat expectations for third-quarter sales and profit, but provided a downbeat outlook for the current quarter.

Shares of Abercrombie & Fitch Co. surged more than 19% in premarket action, after a Thursday-morning earnings release that showed the company beating earnings and sales estimates by wide margins.

How are other markets trading?

Asian markets ended Thursday mostly higher, following the lead of U.S. markets on Wednesday. Japan’s Nikkei NIK, +0.39% rose 0.4%, it’s fifth-straight day of gains, while markets in South Korea SEU, +0.28% and Australia XJO, +0.58% also logged gains.

Chinese markets were the exception to the rule, with Hong Kong’s Hang Seng Index HSI, -0.87% losing 0.9%, and the Shanghai Composite Index SHCOMP, -1.32% losing 1.3% as investors worry that this weekend’s Trump-Xi summit will provide no tariff relief for a slowing Chinese economy.

Crude Oil CLF9, +2.03% is staging a bit of a comeback, up 1.3% Thursday to $51 a barrel, after briefly dipping below $50 for the first time in over a year. Gold GCZ8, +0.16% edged 0.3%, higher, while the U.S. dollar DXY, -0.05% was virtually unchanged.